Credtech Report Card: HackerRank, CodeFights, Credly, ACT, More

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Educational technology companies are augmenting the traditional educational system with their online coursework offerings, but they’re also creating a competing universe where students can find alternate learning experiences that may qualify them for a job, even if they don’t have an academic degree.

A core element in this universe is the invention of new kinds of credentials that attest to an independent learner’s mastery of skills that are in demand by employers, such as coding, critical thinking, and even physical tasks such as research laboratory techniques. So-called “credtech” companies come in many forms, but one of their chief aims is to give people digital credits for educational accomplishments made outside of high school classrooms and college campuses.

We checked in on some of these alternative credentialing companies this month to see how they’re progressing.

—HackerRank, which holds online coding challenges and then scores software developers on their performance, this month announced it had raised $30 million in a Series C fundraising round led by growth equity firm JMI Equity. Mining its knowledge of the skills of more than 3.4 million developers who compete in its contests, Palo Alto, CA-based HackerRank helps business clients find candidates for their tech job openings.

Like many credtech companies, HackerRank’s services touch on some of the roles of a school or university, and go beyond them into the field of employee recruitment and matchmaking. Students can learn and practice coding free on the company site, and their contest “grades,” generated by the company’s automated process, serve as credentials that may take their place aside the traditional college sheepskin as they apply for jobs.

HackerRank plans to use its new capital to scale up its user base and further develop its data analytics capabilities to better serve as a recruitment service for clients such as BlackRock, Atlassian, and VMware. JMI Equity was joined in the company’s Series C round by previous investors Khosla Ventures, Battery Ventures, Randstad Innovation Fund, and Chartline Capital Partners. HackerRank’s fundraising total now amounts to $58.2 million, according to a company statement.

It’s not surprising that much of the activity around alternative credentials centers on IT skills. As the tech industry grows, and non-tech companies adopt tech tools, employers are scrambling to find staffers who can handle anything from simple website design to advanced artificial intelligence projects. This can create opportunities for online learners without formal education. And even college graduates in computer science must continue to prove, over the course of their careers, that their skills are up-to-date.

Credtech companies such as HackerRank say their independent testing and evaluation services can discover talented women and minority members who might otherwise escape the notice of employers due to unconscious bias or intentional discrimination during the hiring process. HackerRank has also issued a guide for employers who want to eliminate discriminatory elements from their job candidate screening methods.

—CodeFights also “gamifies” learning and assessment for tech jobseekers by staging online software programming tournaments. With the data culled from players, CodeFights pre-screens job candidates to offer to its business customers through the service CodeFights Recruiter. The company also hosts employer-created challenges tailored to gauge the fitness of developers for specific jobs.

This month, San Francisco-based CodeFights announced a new feature of its recruitment service—Sourcing Assistant—that helps employers find job candidates on LinkedIn. The assistant is a Chrome web browser extension that scans LinkedIn profiles in a hunt for engineers with skills that match the requirements for particular positions, such as fluency in specific programming languages. CodeFights flags the top candidates and assigns a matching score to each.

CodeFights, which launched in 2014, names Evernote, Dropbox, Quora, and Asana among its customers. Investors in its $10 million Series A fundraising round in 2016 include e.ventures, SV Angel, Felicis Ventures, A_Capital, and Granatus Ventures.

Like coding ability, competency in other subjects, such as writing, can also be measured by mastery of many component skills that are too granular to be captured by a college transcript or résumé. Skill in writing, for example, encompasses grammar, composition, logic, spelling, and research, among other things. A growing contingent of companies, employers, and non-profit organizations are working together on methods to measure discrete elements of competency in various fields, whether they are learned in the classroom, online, or in the workplace.

—Credly, a New York-based digital credentials company, announced this month that it is expanding a partnership with the American Council on Education (ACE) to capture the learning accomplished by workers in on-the-job training programs. Those skills will be recorded in a portable, digital transcript that can be shared with employers and searched by machines, and can sometimes help workers qualify for academic credit. The initiative, called the ACE/Credly Working Transcripts Project, was funded with a $1.5 million grant from Lumina Foundation, an Indianapolis non-profit that advocates for alternative forms of skills verification as part of its mission to promote post-secondary education and training.

Lumina is also an investor in Credly, which helps universities, as well as non-academic entities such as businesses and industry associations, to create electronic badges that signify gains in learning. The badges can be displayed on the learners’ LinkedIn profiles and on digital résumés.

In September, Credly raised $4.6 million from investors including New Markets Venture Partners, University Ventures, Lumina Foundation, City & Guilds Group, and Lion Brothers, bringing its total fundraising to $7 million.

—An established giant in the skills testing industry, college entrance exam provider ACT, announced this month that it invested $7.5 million in Smart Sparrow, an interactive online learning company that specializes in training students in physical skills, such as lab work and drafting for engineers. Smart Sparrow, which has headquarters in San Francisco and Sydney, Australia, offers a design platform where educators can create and host full courses or briefer instructional units.

Iowa City-based ACT, which aims to become “a learning company and a learning analytics company,” is joining a digital community where traditional roles in education are getting blurred or combined. Employers are helping to create digital courses and design their own assessment tests; online education companies and game sites are becoming accreditation agencies and professional recruiters; and now, a big testing company is starting a digital learning venture. ACT is making use of its college admission testing expertise to assess student learning at key points in grade school and high school, in order to guide remedial work. The big company is becoming an edtech provider in that area, with the new program ACT CollegeReady, which is designed to help college-bound students catch up on their English and math skills before they arrive on campus.

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Bernadette Tansey is Xconomy's San Francisco Editor. You can reach her at btansey@xconomy.com. Follow @Tansey_Xconomy